R.J. Reynolds Settles for $1.5 Million Over KOOL Promo

By Oct 12, 2004

R.J. Reynolds Tobacco Co. reached a $1.5 million settlement last week with attorneys general in three states over a cigarette promotion for its KOOL brand.

AGs from New York, Illinois and Maryland had charged that Brown & Williamson—which merged with RJR last August—violated the 1998 Master Settlement Agreement with tobacco companies because it targeted young people with its KOOL Mixx campaign.

Brown & Williamson hosted hip-hop KOOL Mixx DJ competitions in major urban markets including New York, Atlanta, Chicago, Washington, Detroit, Cleveland, St. Louis, San Francisco, Los Angeles and Houston to promote its KOOL menthol cigarettes. The company admitted no wrongdoing.

Terms of the agreement called for RJR to pay the $1.5 million to four organizations (the CDC Foundation, the National African-American Tobacco Prevention Network, American Lung Association of Metropolitan Chicago and the Bobby E. Wright Community Health Center), with the money to be devoted to youth smoking prevention programs.

In addition, the company agreed to certain limits on selected elements of marketing support for future KOOL Mixx promotions.

RJR agreed to not distribute its promotional Kool-branded CD-ROM in magazine ads, but could include the discs in direct mail to adult smokers or distribute them in adult-only facilities. The discs can no longer contain interactive elements, RJR spokesman David Howard said yesterday.

Howard said RJR also agreed to no longer sell special-edition KOOL Mix four-packs at retail that when put together created a mural—which had come to be considered collectible—but could use them for sampling at adult-only events.

“We are pleased that we were able to resolve this issue in a manner that not only enables us to continue to compete effectively for the business of adult smokers, but makes additional funding available to youth smoking prevention programs,” said Charles A. Blixt, executive VP and general counsel of RJR, in a statement.

The agreement requires approval by the New York Supreme Court, the Circuit Court for Baltimore City, and the Circuit Court of Cook County, IL.

The Master Settlement Agreement was reached in 1998 between the state Attorneys General of 46 states, five U.S. territories, the District of Columbia and America’s major tobacco companies to regulate the advertising, marketing and promotion of tobacco products. The tobacco settlement agreements set standards for, and impose significant restrictions on, the advertising, marketing and promotional activities of participating cigarette manufacturers.